panaji
The company recently filed its results, wherein it mentioned that its net debt has come down to Rs 14,900 crore as on March 31, 2017 from a massive Rs 31,800 crore a year ago.
Due to such a huge reduction in debt, GMR Infra’s net debt to equity ratio improved to 1.6 times in FY2017 from 5 times in FY2016. This means that the company had borrowed Rs 1.6 for every Re 1 it had put in itself in FY 2017, while a year ago, it had borrowed Rs 5 for every Re 1 of its owned funds.
Typically, infrastructure companies borrow a lot for their operations, which makes them debt heavy. But, even then, a net debt to equity ratio of 5 times in FY2016 was really high and it had worried the investors.
The fact that GMR Infra has now reduced its debt considerably should bring more confidence among investors about the performance of the company. The company also informed that the reduction in debt was due to debt structuring.
As per the information on GMR Infra’s website, it adopted a strategic debt restructuring (SDR) scheme for its power projects in Chhattisgarh & Rajahmundhry. This resulted in a debt reduction of Rs 4,400 crore due to conversion of debt into equity to lenders.
This means that parties, which earlier owed money to the company, have actually now taken an ownership stake resulting in reduction of debt. Further to it, these power projects are now being classified as ‘associate company’, due to which debt amounting to Rs 8,200 crore will not be consolidated with GMR Infra’s balance sheet.
At an overall consolidated level, GMR Infra ended FY 2017 with a net loss of Rs 574.6 crore.
GMR Infra has built Delhi airport and Hyderabad airport and is now going to build Mopa airport in Goa. The airport part of its business posted a net profit of Rs 869 crore in FY 2017 compared to a net profit of Rs 703.9 crore in the previous year.
